Questions tagged [income-tax]

This tag is to be used for any question pertaining to an individual's income taxes. If this tag is used, ideally a country-specific tag should also be specified, to indicate which region a question belongs to, as the answer may differ based on the country.

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79
votes
22answers
23k views

Why would you ever turn down a raise in salary?

Related to a comment on this question: Is it true that Income Tax was created to finance troops for World War I? Does it ever make financial sense to turn down a raise at your job? It was mentioned ...
70
votes
9answers
38k views

Making $100,000 USD per month, no idea what to do with it

I have a few consulting jobs I do on the side, and this year I've had a lot of extra work, with several months in 2016 exceeding $100,000 USD in billing. I do this work from my home with no ...
54
votes
10answers
19k views

What dissuades people from lying about where they live in order to reduce state income taxes?

Lets say you work in Chicago and live in Chicago but put your home address as somewhere in Indiana. Then every week you collect the mail that is being sent to you in Indiana. Wouldn't you save a lot ...
48
votes
3answers
13k views

If a kid makes money, do the parents take on the tax liability?

Suppose your kid (8 years old) decided to set up a neighborhood lemonade stand and by some freak occurrence managed to somehow make about $3,000. How does one manage the tax liability on that income? ...
46
votes
9answers
10k views

What do I need to do, tax-wise, for a sudden windfall?

I had stock options in a company which was recently sold to a private investment firm. As a result, my options were converted into a single large sum ( > $100,000) and delivered via wire transfer into ...
44
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6answers
7k views

How do tax brackets work? Do they yield significantly different results than a continuous curve?

In Canada (and many other countries), high-earners pay a greater percentage of their income in taxes than low-earners. Here is our Schedule 1 form: The marginal utility of money decreases smoothly ...
43
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2answers
5k views

What US tax laws apply to a 13 year old game developer?

I'm a thirteen year old game developer and I am wondering what the tax laws are as a minor in the US. I don't currently make any money off of my games but I'm thinking of selling on the Google play ...
39
votes
5answers
8k views

How to report $27 in cap gains affordably

I'm preparing my taxes using TurboTax's basic free tier. Last year I had $26.62 in realized long term capital gains. To report this using TurboTax, I need Premier, which is a $54 add on. Even in a ...
39
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4answers
3k views

Will my children owe taxes on my life insurance proceeds?

I had always thought that life insurance proceeds were not treated as taxable income. From IRS publication 525: Life insurance proceeds paid to you because of the death of the insured person ...
38
votes
3answers
9k views

In the USA, why is the Free File software only available for people earning less than $62k?

Free File is a software by the American IRS, which allows one to easily fill out their taxes as long as they earn less than $62k per year. Is there a particular reason for such a restriction? I ...
38
votes
3answers
11k views

In USA, can I set up a one-person corporation and pay myself mainly through dividends?

In the UK an IT-contractor can save in taxes by opening a company, paying themselves a minimum wage as a salary and then taking a larger amount of income as dividends. Is this possible (for a single-...
38
votes
6answers
5k views

How can I adjust tax withholding so that I don't get a large Tax Refund?

I'm a few years out of college now. I've filled out my W4 accurately and I still get a tax refund every year of a pretty sizable sum. The thing is, I have student loans and I would much rather have ...
37
votes
3answers
10k views

How do I deal with an erroneously large refund?

Alright, it's a weird complaint, I know. But I just checked on the status of my refund on the IRS Refund Status website, and the IRS had corrected upward the refund I filed for by a lot. Based on the ...
37
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5answers
5k views

How to handle the Equifax Breach this tax season?

One of the most common forms of fraud is tax return fraud. Generally you don't find out until you go to file and someone has already been kind enough to file your tax return, AND take a payment for it....
36
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4answers
5k views

Deducting charitable donations under new U.S. tax law

I usually donate about $20k to charities every year, and I don't have many other deductions to claim. Given that the new tax law doubles the standard deduction to $24k, I effectively don't get tax ...
34
votes
8answers
23k views

How can I achieve a 13% U.S. Federal tax rate?

MSNBC just had a segment explaining how Bernie Sanders paid 13% in federal taxes. This year my income changed significantly, and I'm making a little less salary than Sanders's ~$200k. However, unlike ...
34
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11answers
12k views

I hate the high taxes in NYC. Should I incorporate in or move to another state?

I'm in NYC currently and make a good living doing remote web development work and I get a 1099 at end of year. My taxes take about 35% of my paycheck. I was thinking about incorporating in another ...
34
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2answers
3k views

How is the taxable value of a goat determined? [duplicate]

I was reading an answer over on Law.SE, and it made me wonder about how the IRS calculates tax on barter transactions. Lets say that I do a job in January, and get paid for my work with 20 goats and ...
33
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8answers
9k views

Are services provided to Google employees taxed as income or in any way?

The particular service I want to look at is food (though I think the same ideas should apply to all services). So Let's say that a Google employee spends a dollar on food, purchasing groceries. They ...
32
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4answers
9k views

I claim one and my wife claimed zero on our W-4s, but we still owe…why?

I'm getting a head start on this year's income taxes for my wife and I. I have my W-2 already and I have her last paystub for the year. I claimed one exemption on my W-4, and according to her paystub,...
32
votes
3answers
5k views

How do you file taxes earlier than an identity thief?

One of the recommendations to avoid tax return fraud/identity theft is to file your taxes as early as possible: FTC Smart Money Identity Theft Resource Center USA Today Notably, the IRS does not ...
31
votes
2answers
46k views

How are long-term capital gains taxed if the gain pushes income into a new tax bracket?

First, my understanding is that the long-term capital gains tax rate is 0% for those whose marginal rate on ordinary income is 10% or 15%, and (ignoring the highest 39.6% bracket) the rate is 15% for ...
28
votes
9answers
5k views

Does owing taxes or getting a tax refund imply my paycheck is off?

A thought crossed my mind recently and I was wondering if someone could explain if I'm missing something, and if so what. Simply put, as an individual filing taxes (single, no dependents), taking the ...
28
votes
2answers
2k views

How does the Patient Affordable Care Act (aka “ObamaCare”) affect my taxes?

As someone who already has insurance through my employer and will not be subject to the fines for being uninsured, what other impacts on my taxes are built into the new healthcare law that I should be ...
27
votes
3answers
9k views

Ask mother to pay off entire student loan, then pay her?

To avoid paying additional interest on my student loans, I want to ask my mother to pay off the entire loans with by lump sum, and then I would pay her back with interest. Are there any issues ...
27
votes
5answers
2k views

Are credit card rewards taxable?

There have been several questions about reward point/loyalty programs offered by credit cards Best Travel Point Credit Cards Best Reward Benefit Credit Cards Easy Comparison of Reward Benefit Cards ...
26
votes
3answers
8k views

Am I obligated to file through a tax preparer after an unsatisfactory consultation?

I have been doing my taxes for 25 years with TurboTax. Like others, I was a bit upset at them for doubling the price of their software, so I decided I would make an appointment with H&R Block, ...
25
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11answers
15k views

What do I do if my income is just a little too high for “free file”?

I live in North Carolina and I'm using the H&R Block website to file my taxes and finally at the end of everything they informed me that there's a limit to how much I could make last year and ...
25
votes
5answers
8k views

kids pooling money for Lego League and taxes

Based on Will I be taxed for accepting money to help needy?, I am wondering how the law goes. Suppose a kid is taking part in a school activity (e.g. http://www.firstlegoleague.org) along with a team ...
25
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2answers
75k views

Canada: Girlfriend did not file tax return since 2006. What to do?

I was just starting my girlfriend's tax return when I realized I didn't have her notice of assessment from 2009. I wanted her tuition carry forward so I decided to call revenue Canada to see what the ...
24
votes
6answers
10k views

Is it worth filing taxes if I only worked an internship?

This past summer I interned at a company and just got my W-2 Form. I am a 17 year old high school student which qualified for 2 Federal exemptions, 0 State exemptions, and 0 Local exemptions. I made $...
24
votes
1answer
8k views

Why would the IRS ask for birth certificates or even audit a small tax return?

My daughter and her boyfriend live together, and he is the sole earner in the home. They each have a kid plus 1 together. H&R Block told them that he didn't make enough to do his return and now ...
24
votes
2answers
5k views

What is the best way to pay large tax amount owed to IRS?

I recently did a preliminary calculation of my taxes for 2018 and discovered that I am going to owe the IRS about $16,000. I do not have this amount of money in reserve. My question pertains to ...
23
votes
6answers
6k views

Is the Standard Deduction better than Itemized when both are the same amount?

For 2018 the standard deduction is $12,000 for individuals, $24,000 per household. If someone's itemized deductions equals the standard deduction, or is very close, which one is better to take? For ...
23
votes
2answers
3k views

Can I claim household services as business expense? (USA)

I have a side income that takes a lot of time. Part of how I find time for this is to outsource some of my own household chores - such as lawn mowing. Can I deduct the lawn mowing costs and other ...
23
votes
2answers
4k views

What is meant by one being in a “tax bracket”?

I've always wondered but just now asking: What is meant by one being in a "tax bracket"? Does that mean only Federal, or does it include State AND Federal? For example: I (would like to) make $100K a ...
22
votes
8answers
12k views

Why did the federal government ever allow taxpayers to deduct their state taxes from their federal taxes? [closed]

At the end of 2017, President Trump signed into law the Tax Cuts and Jobs Act with among other things eliminated the federal tax deduction for state taxes paid. Essentially, the federal government ...
22
votes
2answers
6k views

Is it legal for a landlord to report a large payment to a tenant using Form 1099?

I recently signed a Mutual Termination of Lease agreement with a landlord who purchased the complex I was living in (CA,USA). Part of the termination of lease agreement specified a large payment for ...
21
votes
2answers
7k views

How to avoid earning $10/year from equities

I am an American disabled person and my only income is from disability payments, which are well below the poverty level. As such, I do not file any tax returns. Many years ago, I bought about 3 ...
21
votes
1answer
3k views

I haven't filed a return to the IRS in 10 years

My employers have always withheld taxes and for the most part I've assumed they've done it right. I have probably owed a bit some years and been owed a refund some years. Anyhow, I want to get ...
20
votes
2answers
6k views

Mistakenly claimed to be exempt from federal taxes: do I need to proactively pay back the taxes that did not get withheld?

When I enrolled with my new employer's HR system on Dec 1st, I mistakenly filed a W4 claiming to be exempt from federal taxes, which I'm not. As a result, my first (Dec 15th) paycheck was quite ...
20
votes
1answer
4k views

Is income from a check taxed according to the date written or the date deposited?

Scenario Let's say I was given a check from an LLC on December 15 that was written to my LLC on that same day, and I cash it on January 15 the following year. Question Will I have to claim the ...
20
votes
4answers
10k views

Why are estimated taxes due “one month early” for the 2nd and 3rd quarters only?

According to the United States internal revenue service, federal estimated tax payments are due on this schedule: April 15 June 15 September 15 January 15 (of the next year) June is only two months ...
19
votes
4answers
51k views

How do I opt-out of the Social Security system?

How do I opt-out of the Social Security system and give up my Social Security Number? If I do this, am I then exempt from paying Social Security income tax?
19
votes
5answers
51k views

Is it normal to have 28.5% of various income taxes deducted from my paycheck?

I just got out of college, still live with the parents (saving up money) been employed for a year in the industry, and got a not bad starting salary. First check I received was shocking, to see 28.5% ...
19
votes
2answers
2k views

Which year to use to pay US taxes on business income that was invoiced in December but paid in January?

I was paid a few hundred dollars to review a few textbooks. I submitted an invoice in Dec 2016, and received payment in Jan 2017. When I pay taxes on this income, does that count towards 2016 or 2017? ...
19
votes
2answers
5k views

What's my tax situation if I earned $20k, age 22, and live with parents?

I'm a bit confused about what to expect when I file tax returns. I heard my parents can't claim me as a dependent because I earned more than $6k for the year. What's the situation if I live with them ...
19
votes
2answers
3k views

Should I choose Itemized or Standard deduction?

I see I am saving more when I choose Itemized deduction, even though its less than standard deduction. Is that normal? And in this case should I choose itemized and disregard recommendation of Turbo ...
19
votes
4answers
6k views

Why pay estimated taxes?

It looks like the tax investment penalty is about 2.6%, which makes me wonder why anyone pays quarterly estimated taxes. Wouldn't you be better off putting that money into stocks and using the ...
19
votes
1answer
4k views

Can I expense when buying my own lunch

I am organized as a single member LLC. And I work from home. I see that some corporations buy their employees lunch and expense it. My question is... Can I order lunch or go out to eat by myself and ...